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Total Articles: 42

Supreme Court Changes The FLSA Exemption Review Standard To Favor Employers!

In April, the United States Supreme Court ruled employees at a California auto dealership, Encino Motorcars, LLC, who advise customers about repair work fall under a Fair Labor Standards Act (“FLSA”) exemption that excludes “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” This means these auto service providers are exempt from overtime pay requirements on the federal level.

In Today’s Gig Economy, Are Dealerships Classifying Dealer-Trade Drivers Correctly?

The term gig economy is not just one you hear millennials use; it’s a continuously growing workforce of independent contractors who value flexibility over what used to be referred to as a steady job.

Supreme Court Clarifies FLSA Exemption for Sales, Service Advisors, Partsmen, and Mechanics

The U.S. Supreme Court recently gave relief to automotive, tractor, and aircraft dealerships, clarifying that service advisors are – like salesmen, partsmen, and mechanics – exempt from payment of overtime under the Fair Labor Standards Act (FLSA).

A "Fair" Reading of FLSA Exemptions: The Supreme Court Holds that Service Advisors Are Exempt from Federal Overtime Laws

If you're not a car dealer and you missed the Supreme Court's decision last week in Encino Motorcars, LLC v. Navarro, we forgive you. After all, at first blush, the decades-long battle over application of the "salesman" exemption to service advisors under Section 213(b)(10) of the federal Fair Labor Standards Act (FLSA) should not concern anyone outside the dealership industry.

Employers, Rev Your Engines: SCOTUS Rejects Narrow Construction of FLSA Exemption in Encino Motorcars, LLC v. Navarro

The Fair Labor Standards Act (FLSA) requires employers to pay overtime compensation to covered employees, but exempts from overtime numerous categories of workers. Traditionally, these exemptions have been construed narrowly against the employer asserting them. Not anymore.

U.S. Supreme Court Rules Automobile Dealership Service Advisors Not Entitled to Overtime-Pay under FLSA

On April 2, 2018, in Encino Motorcars, LLC v. Hector Navarro, et al., the U.S. Supreme Court held that automobile dealership “service advisors” are exempt from the Fair Labor Standards Act (FLSA) overtime-pay requirement under 29 U.S.C. § 207(a), which requires that an employer pay overtime to covered employees who work more than 40 hours in a week. The exemption at issue applies to “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements...” § 213(b)(10)(A). Petitioner Encino Motorcars, LLC was a Mercedes-Benz dealership in California. Respondents were current and former service advisors for the petitioner.

Supreme Court Exempts Auto Service Advisors from Overtime, Rejects ‘Narrow Construction’ Principle in Applying FLSA Exemptions

After years of litigation, including two trips to the U.S. Supreme Court, on whether service advisors who work in an automobile dealership are exempt from overtime under the Fair Labor Standards Act (FLSA), the Court finally has held, in a 5-4 decision, that service advisors are exempt from overtime under the “automobile dealer” exemption applicable to salesmen, partsmen, and mechanics. Encino Motorcars, LLC v. Navarro, 2018 U.S. LEXIS 2065 (Apr. 2, 2018). But the case has implications far beyond the industry-specific exemption.

Supreme Court Holds That Automobile Service Advisors Are Exempt

Today, the United States Supreme Court issued its decision in Encino Motorcars, LLC v. Navarro, holding by a 5-4 vote that service advisors employed by a car dealership are exempt from overtime under the FLSA. The case deals with a specific exemption provision of the FLSA, 29 USC section 213(b)(10)(A), which exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks or farm implements” from the overtime requirements of the statute. The plaintiffs in the case were current and former service advisors for Encino Motorcars who sued, claiming they were entitled to overtime pay. After the district court held that the service advisors were exempt and dismissed the case, the plaintiffs appealed to the Ninth Circuit, which reversed and held that the FLSA exemption did not apply to service advisors. In so holding, the Ninth Circuit relied on a 2011 interpretation of the Department of Labor, in which the DOL ruled that the exemption did not apply to service advisors. Following a petition for review by Encino Motorcars, the Supreme Court held that the Ninth Circuit erred by relying on an invalid 2011 interpretation of the DOL. Rather than decide whether or not the service advisors actually qualified as exempt, however, the Supreme Court remanded the matter to the Ninth Circuit to decide (without reliance on the 2011 DOL interpretation). On remand, the Ninth Circuit doubled down, again finding that service advisors did not qualify for exemption under the FLSA provision in question. Encino Motorcars again successfully petitioned for review.

Supreme Court Rules that Service Advisors at Automotive Dealerships are Exempt from Overtime and Rejects Principle that Exemptions to FLSA Should be Construed Narrowly

Executive Summary: On April 2, 2018, the U.S. Supreme Court ruled 5-4 in Encino Motorcars, LLC v. Navarro that service advisors at automotive dealerships are exempt from overtime. The exemption at issue involves “any salesman, partsman or mechanic primarily engaged in selling or servicing automobiles.” 29 U.S.C. 213 (b)(10). The Supreme Court reversed the Ninth U.S. Circuit Court of Appeals which had ruled that based on a plain reading of statutory text, principles of statutory interpretation (narrow construction of FLSA exemptions), and legislative history, the exemption does not encompass service advisors.

eLABORate: U.S. Supreme Court Reverses Ruling: Auto Service Advisors Will Not Receive Overtime Pay

On April 2, 2018, in Encino Motorcars, LLC v. Navarro et al.,the United States Supreme Court held that service advisors at car dealerships are exempt from the overtime-pay requirements of the Fair Labor Standards Act (FLSA). That is, dealerships are not required to pay service advisors time and half for working more than 40 hours in a week. The Court based its decision on the application of an exemption to the FLSA. The Court also reversed a Ninth Circuit decision holding that the exemption did not apply to service advisors.

SCOTUS Rules That Car Dealership Service Advisors Are Exempt, Puts the Brakes On Overtime Claims

In its April 2, 2018, decision in Encino Motorcars, LLC v. Navarro, the Supreme Court of the United States issued its second opinion in this case and definitively ruled that automobile service advisors are exempt from overtime under section 213(b)(10)(A) of the Fair Labor Standards Act (FLSA). The sole question before the Court was whether a service advisor is a salesman who is “primarily engaged in . . . servicing automobiles.” In a 5-4 decision, Justice Thomas wrote for the majority stating that the best reading of the statutory text leads to the conclusion that service advisors are exempt from overtime because they are salesmen in that they do make sales of services for vehicles and they are primarily engaged in servicing automobiles.

Supreme Court Rules Auto Service Advisers Are Exempt From Overtime

Earlier today (April 2, 2018), the U.S. Supreme Court ruled that auto service advisers (also commonly referred to as “service writers”) are exempt from overtime under the Fair Labor Standards Act (“FLSA”). Today’s ruling in Encino Motorcars LLC v. Navarro et. al. has affirmatively answered the long-standing question as to whether auto service advisers are covered by the FLSA’s “salesman” overtime exemption, which includes “any salesman, partsman or mechanic primarily engaged in selling or servicing automobiles.” The Court’s decision overturned the Ninth Circuit Court of Appeals ruling that service advisors do not fall under the exemption, and followed rulings in both the Fourth and Fifth Circuit Court of Appeals holding that they were exempt from overtime.

Supreme Court Ruling Could Broaden FLSA Overtime Exemptions

For several decades, federal courts have followed a principle that the exemptions from the overtime requirements of the Fair Labor Standards Act (FLSA) are "to be narrowly construed against the employers seeking to assert them and their application limited to those establishments plainly and unmistakably within their terms and spirit."

Supreme Court Gives Dealerships The Green Light: Service Advisors Are Exempt From FLSA Overtime Requirements

The Supreme Court today handed auto dealerships—especially those on the west coast—a long-awaited 5-4 victory by holding that service advisors are exempt from the Fair Labor Standards Act’s overtime-pay requirement because they are “salesm[en]...primarily engaged in... servicing automobiles.” The ruling returns the law to the place it had been for decades prior to a stunning and controversial 2011 agency decision that upended what had been standard practice at many dealerships.

Service Adviser Exemption Goes Back to the Supreme Court

On September 28, 2017, the U.S. Supreme Court agreed to hear a case in which the Court will be asked to decide whether the FLSA’s overtime exemption covering “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” The case is Encino Motorcars v. Navarro, No. 16-1362.

Supreme Court Grants Certiorari (Again) to Address Circuit Split on FLSA Automobile Dealer Exemption

After effectively “punting” on the issue last year, the U.S. Supreme Court has again granted certiorari to resolve a circuit split regarding whether “service advisors” at automobile dealerships are exempt from receiving overtime under an exemption for “salesmen, partsmen, and mechanics” under the FLSA. Encino Motorcars, LLC v. Navarro, No. 16-1362 (U.S. Sep. 28, 2017).

Ninth Circuit Rules Service Advisors at Automotive Dealerships Are Not Exempt From Overtime Pay

xecutive Summary: On January 9, 2017, the U.S. Ninth Circuit Court of Appeals ruled in Navarro v. Encino Motorcars, for the second time, that service advisors at automotive dealerships are not exempt from overtime. In 2015, the Ninth Circuit relied on U.S. Department of Labor regulations to hold that service advisors are not exempt. In June 2016, the U.S. Supreme Court reversed that ruling, finding that the regulations were not entitled to deference, and directed the Ninth Circuit to reconsider the issue without regard to the DOL regulations.

Ninth Circuit Reaffirms Service Advisors Eligible for Overtime, Setting Up Second Potential Trip to Supreme Court

The U.S. Supreme Court in 2016 granted certiorari in Encino Motorcars, LLC v. Navarro to resolve a circuit split regarding whether “service advisors” at automobile dealerships are exempt from receiving overtime under the Fair Labor Standard Act pursuant to an exemption for any “salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” The federal appeals court in San Francisco, deferring to a 2011 Department of Labor regulation, had held service advisors are not covered by the exemption and, therefore, are entitled to overtime.

Groundhog Day Comes Early For West Coast Auto Dealers: Another Loss In Service Advisor Exemption Battle

In a disappointing but perhaps unsurprising decision, the 9th Circuit Court of Appeals once again ruled that service advisors employed by automobile dealerships do not qualify for the Section 13(b)(10)(A) overtime exemption under the federal Fair Labor Standards Act (FLSA). For dealers on the west coast, this might sound like a familiar story. In fact, you would be forgiven if you feel like you are reliving an early version of Groundhog Day and hearing the same story once again. You wouldn’t be far off.

What Is The Section 7(i) Exemption And Does It Apply To Auto Dealer Service Advisers?

Over the summer, the U.S. Supreme Court punted on the question of whether “Service Advisers” or “Service Writers” at auto dealerships fall within the Fair Labor Standards Act’s exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” For those outside of the auto industry, these are the people who greet you when you pull into the service department and communicate with you about what work your car might need. Since the question of whether service advisers count as “salesmen” may not be definitively resolved for some time yet, many auto dealers find themselves looking for other overtime exemptions that may apply to these positions.

Overtime Exemption for Auto Dealership 'Service Advisors' Back on the Table

Auto dealership "service advisors," who are responsible for evaluating vehicles and suggesting repairs to their owners, may once again qualify for an exemption from the overtime requirements of the Fair Labor Standards Act (FLSA).

Supreme Court Rejects Deference to DOL Regulation on FLSA Exemption Due to Failure to Provide Reasoned Explanation for Change

The Supreme Court granted certiorari in Encino Motorcars, LLC v. Navarro, No. 15-415 (June 20, 2016), to resolve a circuit court split regarding whether “service advisors” are exempt from receiving overtime pay under the Fair Labor Standards Act (FLSA). Although the parties thoroughly briefed the issue, the Court did not resolve the question. Instead, as Justice Clarence Thomas noted in his dissent, the Court decided to “punt” (likely due to an inability to garner a majority opinion because of the vacancy at the Court caused by Justice Antonin Scalia’s death that has left it with just eight members since February). Automobile dealers are likely to face uncertainty a while longer.

The Supreme Court Shoots Down DOL Regulations, But Declines To Rule Whether Service Advisors are Exempt From Overtime Pay Requirements

Yesterday, the United States Supreme Court issued its long-awaited decision in the Encino Motorcars, LLC v. Navarro case, that many hoped would resolve the issue as to whether Service Advisors at auto dealerships are exempt from the overtime provisions of the Fair Labor Standards Act (FLSA).

Car Dealership’s Service Advisors’ Overtime Controversy Stalls in the Supreme Court

On June 20, 2016, the Supreme Court of the United States issued a ruling regarding the Fair Labor Standards Act’s (FLSA) overtime exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” at a covered dealership under section 213(b)(10)(A) of the FLSA. A 1970 U.S. Department of Labor (DOL) regulation limited this overtime exemption to salesmen (who primarily obtained orders or made sales of vehicles) and excluded service advisors (who sold service and maintenance services) from its coverage. After several courts rejected this interpretation, the DOL’s Wage and Hour Division (WHD) issued an opinion letter in 1978 and amended its Field Operations Handbook in 1987 stating that service advisors could be exempt from overtime under section 213(b)(10)(A).

Supreme Court Calls “Do Over” On FLSA Service Advisor Exemption Rule

In a 6 to 2 decision, the U.S. Supreme Court today continued the flip-flop-flip on determining whether an automobile dealership’s service advisors are exempt from the FLSA’s overtime requirements. The Court vacated and remanded the case back to the 9th Circuit Court of Appeals for further proceedings, essentially calling a “do over.” For dealerships in the 9th Circuit – those in California, Washington, Nevada, Arizona, Oregon, Alaska, Hawaii, Idaho, and Montana – this case provides a hopeful reprieve (Encino Motorcars, LLC v. Navarro et al).

Car Leasing Employee’s Equal Pay Discrimination Claim Proceeds, Federal Court Rules

A car leasing company’s manager will go to trial on her Equal Pay Act claim because the employer failed in its burden to show the manager’s gender provided “no basis” for the pay differential between her and her male counterpart, a Mississippi federal district court has ruled. White v. Checker Leasing, Inc., No. 1:14CV172-SA-DAS, 2016 U.S. Dist. LEXIS 17066 (N.D. Miss. Feb. 11, 2016).

The Supreme Court Will Decide Service Advisor's Exempt Status

Dealerships will soon get a decisive ruling from the U.S. Supreme Court about an issue that has become a thorn in the side for many dealers. The issue: whether Service Advisors are exempt from overtime requirements under Section 13(b)(10)(A) of the Fair Labor Standards Act (FLSA), which exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers.”

Supreme Court Agrees to Hear Service Advisor OT Pay Split

As we reported back in October 2015 a car dealership, Encino Motorcars, petitioned the Supreme Court to “restore uniformity” to the enforcement of legal precedent and hold that service advisors are exempt from the FLSA’s overtime requirements. On Friday, the Supreme Court agreed to hear the case and hopefully resolve the issue once and for all as to whether service advisors are entitled to overtime pay.

Supreme Court to Decide Whether Car Dealership 'Service Advisors' Are Exempt From Overtime

The US Supreme Court has agreed to hear a case that will determine whether auto dealership "service advisors," who are responsible for evaluating vehicles and suggesting repairs to their owners, qualify for an exemption from the overtime requirements of the Fair Labor Standards Act (FLSA).

SCOTUS to Resolve Circuit Split Regarding Whether “Service Advisors” Are Exempt From Overtime and Consider Deference Owed to USDOL

On Friday, the United States Supreme Court agreed to resolve the current split among the Circuit Courts regarding whether “service advisors” are exempt from overtime under the 213(b)(10) exemption, an exemption applicable to any “salesman, partsman, or mechanic” who is primarily engaged in “selling or servicing automobiles.”

Supreme Court to Reexamine Service Advisor Exemption

Last October, we reported on a petition by an auto dealership asking the U.S. Supreme Court to overturn a ruling by the 9th Circuit Court of Appeals holding that the dealership's service advisors did not qualify for the FLSA's exemption for any "salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” Last Friday, the Supreme Court granted that petition. Oral arguments in the case, Encino Motorcars, LLC v. Navarro, will likely be scheduled for Spring 2016.

Supreme Court to Resolve Circuit Split on OT Pay for Car Dealerships?

As you have read in our blog over the years, the misclassification of employees as exempt is one of the primary claims in wage and hour litigation. Misclassification claims can arise in many forms, including the classification of a certain job in a particular industry. Mortgage loan officers anyone? Today’s post is focused on the world of car dealerships – specifically the job of service advisors.

Automobile Service Advisers Are Not Exempt Under the FLSA—At Least Not According to the Ninth Circuit

Navarro v. Encino Motorcars, LLC, No. 13-55323 (March 24, 2015): The plaintiffs in Navarro v. Encino Motorcars, LLC were “service advisors” at a Mercedes Benz dealership. The main duties of service advisors are to evaluate the repair needs of customers’ vehicles and then to recommend and sell service.

9th Circuit Splits with 4th, 5th Circuits, Finds Auto Dealer Service Advisors Not Exempt Under FLSA

Reversing a district court decision, and declining to follow decisions from a number of other courts, including the Fourth and Fifth Circuits, the Ninth Circuit has deferred to the Department of Labor's (DOL) "flip-flopped" view of whether the FLSA's exemption for "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles," applies to auto dealer service advisors/service writers.

USDOL Still Barred From Challenging "Service Writer" Exemption

Readers will recall that, in April 2011, the U.S. Labor Department declined to adopt an interpretation proposed in 2008 that would have acknowledged the federal Fair Labor Standards Act overtime-exempt status of employees doing the typical work of service writers, service advisors, etc. in automobile dealerships and truck dealerships. Prospects were that USDOL would reverse an enforcement policy of two decades' standing and would begin challenging the FLSA Section 13(b)(10)(A) overtime exemption as applied to these workers.

Appellate Court Invalidates Auto Dealership's Method Of Paying Service Technicians

In an unpublished decision, the California 2nd District Court of Appeal held that that piece-rate-paid employees are entitled to separate hourly pay for “waiting” time. The case involved a class of 108 automobile service technicians who worked for Downtown LA Motors, LP (DTLA), a Mercedes-Benz dealership. Gonzalez v. downtown LA Motors, LP.

"Service Writers" And Similar Workers: Good News/Bad News

Various news items published last Friday afternoon intimated that a part of the 2012 federal omnibus appropriations law now exempts automobile-dealership service writers and similar employees* from the federal Fair Labor Standards Act's overtime requirements. Those reports appear to have been mistaken so far as we can tell, but the spending provision does contain at least some good news in this respect.

What To Do About "Service Writers" And Similar Employees?

The federal Fair Labor Standards Act's Section 13(b)(10)(A) provides an overtime exemption for "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers."

Auto Dealers: "It's Always Something!"

Just when you think you have everything under control, some new problem or challenge comes along. It is that way with many things and the law is no exception. The federal-wage hour law, called the Fair Labor Standards Act (FLSA), was passed in 1938, so you would think that in the last 70+ years, the courts and the Department of Labor have resolved every issue once and for all. Unfortunately, that is not the case.

Dealership Update: Extra Pay For A Courtesy Inspection?

A dealership recently received a demand letter from an attorney for a former technician. In the letter, the attorney threatened to sue the dealership because it had failed to pay the technician extra money to conduct "courtesy inspections." Even though the technician had earned well in excess of the minimum wage and was exempt from overtime, the attorney insisted that the dealership was legally obligated to pay the technician for the extra work performed.

Dealerships Working 24/7: Issues to Keep In Mind.

Many Toyota dealerships have announced that they will remain open 24 hours a day in order to fix the accelerator problem that has prompted the recent recall of several models. This unprecedented step is likely to raise a number of employment law issues for the affected dealerships, and may serve as a model for any other companies that may face similar issues in the future.

Dealership Update: Out of the Frying Pan, Into the Fire.

As the economy shows no immediate sign of recovery, dealers continue to look for ways to reduce their expenses. One area that they usually focus on is labor costs. Most dealers have already trimmed their workforces by not replacing employees who have left, or by out-and-out layoffs or reductions-in-force. Some dealers have also revised or restructured employee pay plans to reflect the current economy.
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